The renting business might seem old hat. But a closer
look at LA Technologies’ business shows otherwise.

R

ENTING IS outdated. After

all, in the new era of hosting
and cloud computing, when
actually having to touch and
manage hardware is considered an absurdity, why would anyone rent? And
if no one wants to rent, then a business
based on renting is as crazy as creating
a ladder to the moon.
Or is it?
Not if you ask Mumbai-based LA
Technologies. Renting hardware
makes up 30 percent of the system
integrator’s topline. Lawrence Albert,
founder and director, LA Technologies,
is proud that amidst the rush of new
technology jargon, his company’s been
able to discover ongoing opportunities
from a fairly old concept.
If you think you can make a run at
such a business, here’s a SWOT analysis
of LA Technologies’ renting business.

STRENGTHS
For anyone who thinks that renting is
past its prime, picture these enterprise
use-case scenarios: An application that
needs to be tested. A migration project
at a large organization. A project that
needs to scale up fast. A one-off project. A hard-to-get piece of hardware
that goes bust. A trusted vendor failing
to deliver hardware in time.
You get the idea, it’s a pretty long
laundry list.

WHY IT WORKS
v For enterprises: Renters

offer features that others
players find hard to match,
including a higher speedof-order-fulfillment, and
shorter-term deal, as low as
three months.

v For SIs: Renting creates a

steady stream of income, a
blessing in uncertain times.
And it also allows renters to
get a foot in the enterprise
door, which can lead to
more profitable service and
support deals.

ing very large enterprises. Our clients
include major IT/ITES and financial
organizations undergoing migration
projects. In fact, we’ve supplied the entire infrastructure for some of India’s
major banks, for a quarter, on an opex
model, while they migrated to their
new datacenters. Interestingly, some of
these projects were extended to multiple quarters because of delivery delays
from OEMs,” he says.
LA Technologies’ experience shows
that there’s a healthy business model
here. Since it ventured into renting

storage, networking, power and cooling, UPSes, IP phones, and firewalls.
The depreciated value of the inventory
that LA Technologies currently possesses is around Rs 4 crore and it keeps
investing more.
All that ready-to-ship hardware is a
key strength for renters. “When equipment conks out at 1 in the morning, no
tier-1 partner is ready to provide replacements on a war-footing. They will
take at least one business day. But LA
can provide it within a matter of few
hours,” says Albert. “Our huge stock
of equipment helps us make deliveries
within really short deadlines.”
The terms that renters like LA Technologies offer also work to its benefit.
“While OEMs or tier-1 partners will
only rent out equipment for at least
three years, we are very flexible. We
give equipment for a term as short as
three months,” says Albert.
For LA Technologies, the renting business also ensures a constant
stream of revenue, a blessing in these
uncertain times.

LIMITATIONS
Renting, however, is not everyone’s
cup of tea. Even companies like LA
Technologies that have a proven
track record, have to rely on a very
traditional approach—word of mouth
marketing. “The renting business runs
on references from happy customers,
which is the reason why we don’t market it very aggressively. Most customers come to us,” says Albert.
That makes it hard to profit from
emergencies. With a number of customer requests stemming from outages
that need to be plugged fast, it only
makes sense that LA Technologies
should profit from emergencies. After
all, practically everyone else does it,
from dry cleaners who charge premi-

In the last year, LA Technologies has seen more competition from vendors and
large solution providers have seen the untapped potential in the renting market
and want a piece of the pie.
All of these ideas look great on
paper, but the question is: Do renters
have real customers? Plenty according to Albert. “Renting requests come
from all types of organizations includ26

INDIAN CHANNELWORLD NOVEMBER 2012

about five years ago, LA Technologies
witnessed consistent growth in that
space. The company provides the entire gamut of basic infrastructure hardware components including, servers,

ums for a one-day turnaround, to cab
services that charge higher rates for
taxi booked within 30 minutes of departure, compared to those booked a
day in advance.